Follow Up

Liberty Interactive: Free to Fly

The spinout last year of Liberty Ventures shines a spotlight on Liberty Interactive's remaining and lucrative assets, chiefly QVC. And Capmark Financial Group, the former part of GM's financial services, has been liquidating assets with gains for those who followed advice from Barron's.

Liberty Interactive sells today for $23 a share, and analysts think its assets could be worth at least $30. The strong performance of its chief property, QVC, the nation's dominant home-shopping network, could help to shrink the valuation gap. QVC has annual revenue of more than $8 billion.

Liberty Interactive reported first-quarter results earlier in May that underscored QVC's growing popularity in the U.S. and abroad. Sales rose 5% in the U.S., complemented by double-digit gains in Italy and China. The company's other e-commerce properties also are going great guns, and could help Liberty earn $634 million, or $1.09 a share, this year, and $1.40 in 2014, according to Matthew Harrigan, an analyst at Wunderlich Securities.

Michael Mitchell, an analyst with a New York-based hedge fund that owns shares, also is a fan. "Once we see a full year of stand-alone Liberty Interactive earnings power, the market will start to value the business more appropriately," he says.

-- Christopher C. Williams

Capmark to Leave Investors Smiling

Capmark Financial Group,
which failed spectacularly in the financial crisis and wiped out big investments by the buyout pros at KKR and Goldman Sachs, is again on the verge of leaving the corporate world—this time on a high note.

Once a part of General Motors' financial-services empire, Capmark has liquidated a sizable chunk of its $10 billion in assets over the past 18 months, a success highlighted in a Barron's story a year ago ("The Intriguing Real-Estate Sale at Capmark," May 21, 2012). At the time, Capmark (ticker: CPMK) shares were trading in the Pink Sheets at $22.70 each. Because the crisis had resulted in such discounted valuations of commercial real estate, Barron's figured Capmark could realize at least $29 a share from its sales.

Look for the Exit Door

Capmark has rewarded investors via asset sales, but further gains may be scarce.

We were right. With three distributions based on its liquidations over the last year, Capmark has returned $19 a share to stockholders. The shares still trade at $8.75, meaning investors who took our advice have realized a 22% gain.

Should shareholders hang in there as Capmark unloads the last of its assets? We don't think so. Matt Spiegel, an analyst for Evermore Global Advisors, a New Jersey value shop that bought the stock in 2011, agrees that it's time to move on. "Management and the board have done a terrific job," says Spiegel. "It's just that all of the most liquid assets have been sold." As a result, shareholders may have to wait longer for a potentially smaller distribution.